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Sympathy for the States Tips the Scales in Utility Air Regulatory Group v. EPA

Law and not policy is supposed to be the basis upon which courts decide cases. Yet the Supreme Court’s recent decision regarding permitting stationary sources that emit greenhouse gases is full of as much policy as law. The Court’s bottom line is this: The burdens on the states of giving EPA everything it wants are simply too much.

The Clean Air Act regulates pollution-generating emissions from stationary source (factories, power plants, etc.) and moving sources (cars, trucks, planes, etc.). In 2007 in Massachusetts v. EPAthe Court held EPA could regulate greenhouse gases emissions from new motor vehicles. As a result of that case, EPA concluded it was required or permitted to apply permitting requirements to all stationary sources that emitted greenhouse gases in excess of statutory thresholds.

In Utility Air Regulatory Group v. EPA the Court held 5-4 that EPA cannot require stationary sources to obtain Clean Air Act permits only because they emit greenhouse gases. But, the Court concluded 7-2, EPA may require “anyway” stationary sources, which have to obtain permits based on their emissions of other pollutants, to comply with “best available control technology” BACT emission standards for greenhouse gases.

The Court reasoned that permitting all newly covered stationary sources for greenhouse gas emissions “would place plainly excessive demands on limited governmental resources is alone enough reason for rejecting it.” EPA’s regulations would increase the number of permits by the millions and the cost of permitting by the billions. Small sources like retail stores, offices, apartment buildings, shopping centers, schools, and churches would be covered. States, as permitting authorities, would bear part of the burden by having to hold hearings and grant or deny permits within a year.

To avoid the result described above, EPA issued the “Tailoring Rule,” which increased the permitting threshold for greenhouse gases from 100 or 250 tons per year to 100,000 tons per year initially. The Court concluded EPA “has no power to ‘tailor’ legislation to bureaucratic policy goals by rewriting unambiguous statutory terms.”

Finally, Court held if a stationary source is already being regulated because of its emissions of other pollutants it may be subject to BACT emission standards for greenhouse gases. “Even if the text [of the Clean Air Act] were not clear, applying BACT to greenhouse gases is not so disastrously unworkable, and need not result in such a dramatic expansion of agency authority, as to convince us that EPA’s interpretation is unreasonable.”

While state and local governments may benefit from reduced greenhouse gases, it does not appear they would have benefited much from EPA regulating small sources. During oral argument the Solicitor General informed the Court that about 83% of American stationary-source greenhouse-gas emissions come from “anyway” sources compared to 3% for the non-“anyway” sources EPA sought to regulate. But states will benefit greatly from not having to grant or deny thousands or even hundreds of thousands of permits.